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Gold hits new high; Jewellery related shares dip up to 5% on demand worries

Gold futures scaled a new high of $2,150 per ounce in international markets on hopes of Fed rate cut; but domestic demand a concern for jewellers back home.

Jewellery, Art Work

SI Reporter Mumbai

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Shares of gold jewellery related firms were under pressure in intra-day deals on Wednesday amid concerns of lower demand as Gold futures traded at record high levels in the international market.

Gold April futures hit a fresh all-time high of $2,150.20 per ounce in trades on Tuesday surpassing its previous summit at $2,130 registered in December 2023. In the Indian context, the MCX Gold April futures were quoting near Rs 65,000 levels, as against Rs 61,200 levels at the start of the series.

On the Dalal Street, shares of PC Jeweller and Palm Jewels were locked at the 5 per cent lower circuits. The former was locked at Rs 59.15 on trades of around 2.72 lakh shares, and pending sell orders for 1.87 lakh shares on the BSE. Meanwhile, hit the lower limit at Rs 19.91.

Goldiam International shed 4 per cent at Rs 184. Kalyan Jewellers, Tribhovandas Bhimji Zaveri (TBZ) and RBZ Jewellers declined 2-3 per cent. Titan was down 0.5 per cent.

Gold prices rallied sharply in the international market in recent days on hopes of interest rate cut by the US Federal Reserve.

As per the US Fed Watch tool, probability of a rate cut in June increased to 55 per cent on Tuesday, following a mixed set of economic data. The US services industry growth slowed down in February, while new orders grew to a six-month high, despite high interest rates.

Experts believe that Gold may exhibit high volatility in the near-term, as traders focus on the upcoming US Fed chair's testimony and the monthly jobs report for fresh cues on the likely timing for a rate cut.

"Helped by continued strong buying momentum on the expectations of a Fed pivot in June, spot gold hit a fresh record high on Tuesday. The metal posted its fifth consecutive gain as the key US data fell short of forecast. The yellow metal was supported by risk-off mood in the wider markets, too. The US Treasuries also rallied; the ten-year US yields fell over 1.50 per cent to settle at 4.15 per cent. The US Dollar Index was marginally lower, said Praveen Singh - AVP, Fundamental currencies and Commodities analyst at Sharekhan by BNP Paribas in a note.

That apart, as per World Gold Council report, global gold demand declined 5 per cent to 4,448.4 tonnes in 2023, compared to the previous year, mainly due to continuing Exchange-Traded Fund (ETF) outflows.

Global gold ETFs saw a third consecutive annual outflow, losing 244.4 tonnes compared to 109.5 tonnes in 2022, the report stated.


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First Published: Mar 06 2024 | 12:55 PM IST

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